Last Updated: Mar 25th, 2013 - 16:46:15 Newsletters : 2011 Newsletters : 26 August 2011 Thought for the Day Farmers create wealth. Imagine the land before the farmer arrives. Some of it is scrub and tussock and produces nothing. If the land is fertile river valley then the farmer can work the land with the plow and sow his seeds. He can grow vegetables and live-stock for sale and with the proceeds he can pay people to help with the work. During the 19th century he would have been earning gold and silver from the town's people as just return for providing them with food. That money would pay his costs including the labour and after a year would leave him with a profit which is the reward for the risk and hard work involved in farming. This profit is wealth created and stored as ounces of gold and silver. The workers get paid gold and silver and if they manage to spend on living less than they earn then the difference is their savings which is wealth they have created. This created wealth is capital which can be used to expand the business (the farm) or for lending at interest to others who might need to expand their business. Or it can be spent on fun - and then it is gone. This is a natural economy. No bank - except to store gold and silver safely and wealth increasing slowly and steadily with various setbacks due to the vagaries of the weather or peoples tastes in food. One year the farmer has a bad year and he can't pay gold and silver to his workers so he gives them an IOU for one silver ounce (dollar). A piece of paper with IOU $1 and his signature. With no other option the workers accept the paper and take it to the grocer. He decides to accept it in exchange for food and at the end of the month he collects up all the paper and visits the farmer. Fortunately the farmer has been paid for some livestock sale and gives the grocer 37 pieces of silver for the 37 pieces of paper. Let me now ask you what is the value of the 37 pieces of paper the farmer holds in his hand? 10 seconds ago they were worth $37 to the grocer! What if the farmer just throws them in the fire? Is he any worse off? Has he lost any money? He has certainly paid for his labour. But that is not a loss, that is a payment for work done. The workers have their food and change and the grocer has his money. Suppose that the farmer keeps the $1 paper IOUs under an ornament on his mantlepiece. Is he any wealthier because he saved the paper rather than destroying it in the fire? As Aristotle pointed out many years ago, one of the main attributes of money is that it must have value in and of itself. So that if you save it then that savings represents the result of your efforts and you are entitled to full recompense at any time in the future. This is the role that gold and silver play in our society. Is the paper money stored in the Reserve Bank worth anything? Why is that? What is happening when the Reserve Bank burns a pile of old worn-out bank notes? What happens when the Reserve Bank prints up some new shiny notes? We have lost a proper understanding of wealth and wealth creation since we have been pushed into using only paper as currency. We cannot be sure of the price or value of anything from time to time. This is the difficulty with which the world is struggling at the present time. For more information and videos see our article on REAL Money here. [ Visit Website ] Aug 26, 2011, 10:45 Newsletters : 2011 Newsletters : 26 August 2011 Visit our Facebook We have established our Facebook and publish articles of interest during the week. You can visit us here: [ Visit Website ] Aug 26, 2011, 23:20 Newsletters : 2011 Newsletters : 26 August 2011 Saving New Zealand: Building a More Prosperous New Zealand Don Brash's address to the Workplace Savings Industry Conference. I welcome any information from all contenders in this upcoming election to explain how they propose to make ordinary Kiwis more wealthy. We explain how wealth is created. MPs must understand this process and then explain their political process that will achieve this result. Printing more money and giving it away to the needy is not an option. That is what we are doing currently and all it has produced is a nation of needy people. Aug 26, 2011, 23:14 Newsletters : 2011 Newsletters : 26 August 2011 Nobel Gurus Warn Britain on Fiscal Overkill and Fed on Monetary Overkill The problems generated from trying to run a universal paper money system are unsolvable. Just as they were in Zimbabwe, and all the other places where it was tried in the past. [ Visit Website ] Aug 26, 2011, 10:26 Newsletters : 2011 Newsletters : 26 August 2011 British Government Begins Stealing its Peoples’ Bank Deposits Ahead of the Global Financial Collapse. Theft is the taking of property by force from the rightful owner. By this definition, Taxation is theft. Our governments have been sort of reasonable about this problem (excepting Muldoon's 66% income tax) but they do have the power to take just what they want. When my first grandchild was born I started a bank account for her and over the years we put a bit of money into it to teach her about saving. When she turned 12 I took her to the bank so that she could start up her own account and get signing rights etc. When the bank printed out the statement of her existing account she looked at it in horror. "They've stolen my money," she cried. I looked at her account and sure enough there were regular withdrawals over the years. "They sure have," I replied. That is the government and they call it taxation!" "They even steal from babies now." REAL Life produces some hard lessons as this article describes. If you wish to know more about the authors of this article then go to: http://presscore.ca/2011/?page_id=2 Meanwhile the main story is here. [ Visit Website ] Aug 24, 2011, 10:54 Newsletters : 2011 Newsletters : 26 August 2011 Vietnam and Money Gold is money. Central Bank Money is paper promises to pay - what? The Vietnamese know this and can see it happening. Everyone in Vietnam is a dong millionaire! They still want to dump dongs and buy gold. [ Visit Website ] Aug 24, 2011, 09:32 Newsletters : 2011 Newsletters : 26 August 2011 Vietnam and the Central bank Which will win? Gold or the Dong? Is this a portent of things to come? [ Visit Website ] Aug 24, 2011, 08:38 Newsletters : 2011 Newsletters : 26 August 2011 Gold Shines as Swiss Franc's Haven Appeal Dims The main stream press (Reuters) is now starting to get the point: "Gold is a flight from currency debasement," Bank of New York Mellon's currency strategist Simon Derrick said. "It's not gold going up, it's developed currencies going down." Gold is REAL Money. Just as Aristotle explained all those years ago, money must have certain attributes to be useful, and one of those attributes is that it must retain its value. Paper fiat currency does not retain its value and as Central Banks around the world expand the number of currency units in circulation by 10% or more each year so the value of those currency units goes down by the same proportion. No matter what they say! Central Banks have been contriving to hide this information from us in a cloak of silence but now the truth is coming out. Quantitative Easing is just a fancy term for a desperate printing of a huge amount of paper money (trillions of dollars) to try to keep banks and now nations solvent. Unfortunately reality is not as Mr Keynes describes it. Solving the problem of excessive debt by creating more debt in huge amounts is the path to hyper-inflation. The unfortunate hubris of modern economists and politicians is that they think they are controlling their economies whereas in fact all they are doing is interfering and making it more and more difficult for the underlying natural economy to clear the debt and start working naturally again. We are now seeing that their continual interference is leading to major hardship for their citizens - you and me. Remember what happened when Muldoon tried to control our economy in 1984 by instituting a price freeze, a wages freeze and an interest rate freeze. We all just did our best to survive and our actions could not be controlled by Muldoon as he wanted. The economy faltered and Muldoon called a snap election and lost dramatically. Mr Lange was then stuck with the problem of getting our economy going again or else calling in the IMF to control things for a while. Thus was born our free market economy which allowed us complete freedom of action, and after thrashing around in the big bust of 1987 this economy was producing great benefits for all by 1999. Those who were prepared to work could become wealthy and the country started running a surplus. That is, the government was able to start repaying debt and accumulate savings. Unfortunately Helen and Michael then took over and ran a socialist program expanding the welfare state until, again, it went broke in 2007. When National took over in 2008 they were presented with Lange's problem. Poetic justice at our expense! All this was possible because of paper money. The moral hazard of Central Banking destroys economies - as we are now observing around the globe. The people who create the paper money get very wealthy and we get the resultant debt. Not a good bargain! Interesting that the main stream press should write about it. But they still have not explained it! [ Visit Website ] Aug 23, 2011, 12:12 Newsletters : 2011 Newsletters : 26 August 2011 James G. Rickards talks to James Turk Jim Rickards gives the most interesting, fast moving and accurate analysis of the world money system, the fiscal situation of the important players and an accurate assessment of the politics involved of anyone I have researched so far. I thoroughly recommend his work and James Turk knows just what to ask to get him going! Here is his biography, courtesy of Johns Hopkins University Applied Physics Laboratory: "Mr. James G. Rickards is Senior Managing Director for Market Intelligence at Omnis, an applied research organization. He is also co-head of the firm's practice in Threat Finance & Market Intelligence and a member of the Board of Directors. Mr. Rickards is a senior counselor, investment banker and risk manager with extensive experience in capital markets including portfolio and risk management, product structure, financing and operations. Prior to Omnis, Mr. Rickards held senior executive positions at "sell side" firms (Citibank and RBS Greenwich Capital Markets) and "buy side" firms (Long-Term Capital Management and Caxton Associates). Mr. Rickards has been a direct participant in many significant financial events including the 1981 release of U.S. hostages in Iran, the 1987 Stock Market Crash, the 1990 collapse of Drexel and the LTCM financial crisis of 1998 in which he was the principal negotiator of the government-sponsored rescue. He has been involved in the formation and successful launch of several hedge funds and fund-of-funds. His advisory clients have included private investment funds, investment banks and government directorates. Since 2001, Mr. Rickards has applied his financial expertise to a variety of tasks for the benefit of the national security community. Mr. Rickards is a counselor-at-law in various state and federal courts and has held all major financial industry licenses. He has been a frequent panelist and moderator at professional conferences in the fields of securities, derivatives and hedge funds and is active in the International Bar Association. He has been interviewed in The Wall Street Journal, The Washington Times and "Squawk Box" on CNBC and has published an Op-Ed in the Washington Post. Mr. Rickards is a graduate school visiting lecturer in finance at Northwestern University and the JHU School of Advanced International Studies. He is a member of the Advisory Board of Shariah Capital, a firm specializing in Islamic finance. Mr. Rickards is also a member of the International Business Practices Advisory Panel to the CFIUS Support Group of the Director of National Intelligence. Mr. Rickards holds an LL.M. (Taxation) from the New York University School of Law; a J.D. from the University of Pennsylvania Law School; an M.A. in international economics from the JHU /SAIS, and a B.A. degree with honors from The Johns Hopkins University." [ Visit Website ] Aug 22, 2011, 17:52 Newsletters : 2011 Newsletters : 26 August 2011 Brief History of the Gold Standard in the United States As Craig Elwell says, "This report briefly reviews the history of the gold standard in the United States. It is intended to clarify the dates during which the standard was used, the type of gold standard in operation at the various times, and the statutory changes used to alter the standard and eventually end it. It is not a discussion of the merits of such a system." It is clear that Congress needed more information about gold and the previous use of gold as money in the USA. So if you are interested in the history of gold (and silver) in America this provides a potted history. It may help to keep things in perspective. [ Visit Website ] Aug 21, 2011, 16:49 Newsletters : 2011 Newsletters : 26 August 2011 Value Cut Adrift in a Sea of Paper Money One of our readers sent me this article which appeared in The Australian Financial Review on the 16th of August 2011. It was written by Adam Creighton who is a Research Fellow at The Centre for Independent Studies. It is very pleasing to see that a main-stream newspaper of the standing of The Australian Financial Review has started to print the truth. This may be a small beginning towards getting sanity back into economics and the banking system. Continuing to print paper money as world debts escalate is a recipe for disaster as von Mises points out so clearly. It is not clear to me how one can be an economist without understanding money. But there it is. If you would like to get the jump on the money system then read REAL Money at our website: http://www.economicgrowth.org.nz/artman/publish/real-money.shtml Not only will you learn the secret for making some REAL Money but you will understand how to keep your wealth safe and sound from those who would confiscate it. Aug 20, 2011, 13:31 Newsletters : 2011 Newsletters : 26 August 2011 Fernandez Way Ahead in Argentina Primary "The (Argentine) government currently fines economists who publish inflation estimates that it does not agree with." So much for government information in Argentina! Other Welfare States are much more sophisticated - they put economists on the payroll. [ Visit Website ] Aug 19, 2011, 16:22 Newsletters : 2011 Newsletters : 26 August 2011 Quote for the Week Up until August 15, 1971, there has never in history been an era when no paper currency was linked to Gold. The history of money is replete with instances of coin clipping, printing, debt defaults, and the other attendant ills of currency debasement. In all other eras of history, people could always escape to other currencies, whose Gold backing remained intact. But since 1971, there is no escape because no paper currency has any link to Gold. All of the economic, monetary, and financial upheaval of the past 40 years is a direct result of this fact. The global paper currency system is very young. It depends for its continued functioning on the belief that the debt upon which it is based will, someday, be repaid. The one thing, above all others, that could shake that faith, and therefore the foundations of the modern financial system itself, is a rise (especially a sharp rise) in the U.S. Dollar price of Gold. Bill Buckler, The Privateer Aug 18, 2011, 11:57